The Importance of a Well-Designed Board of Directors
The Importance of a Well-Designed Board of Directors
A board of directors is a body that governs and protects the long-term interests of its shareholders. Comprised of highly experienced individuals with a wide range of expertise A strong board is essential to every business.
Traditionally, boards have overseen the management teams while assisting and the approval of strategies proposed by corporate executives. Nowadays, a well-designed board of directors can provide proactive leadership on major issues, such as corporate strategy and vision the management of risk and opportunity in addition to innovation, talent sustainability, and succession for leadership.
The board of a company typically consists of both insiders and outsiders. An outside director is one who is not employed by an organization. To be considered an independent director, the person must have no material ties to the business.
When putting together your board, consider those who are committed to the mission of your business and have extensive experience in the industry. It’s also important to have individuals with a range of skills and who are able to bring creative problem-solving, and innovation, as well as strategic thinking. It is also important to look for people who have specialized expertise, such as finance, marketing or capital raising.
It’s essential to know that as an official on the board you are a fiduciary and are legally responsible for the company’s highest-level decisions. In addition, if a shareholder, you have the right to vote on board members during the proxy season. If you’re thinking of voting for the board, make sure you go through their proxy documents carefully and verify that they are truly independent.